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PCAOB, SEC to Meet With Chinese Officials on Auditing Oversight

The
PCAOB said Wednesday that a joint PCAOB-SEC delegation will meet
next week in Beijing with representatives of China’s Ministry of
Finance and the China Securities Regulatory Commission (CSRC) to
discuss issues relating to auditing oversight.

“This
meeting is the commencement of our accelerated efforts with the
People’s Republic of China to forge a cooperative resolution to
cross-border auditing oversight,” PCAOB Chairman James Doty said in
a news release. “I believe we share a common objective with Chinese
regulators to protect investors and safeguard audit quality through
our mutual cooperation.”

The
delegation will be led by PCAOB member Lewis Ferguson and include
staff from the PCAOB Office of International Affairs and Division of
Registration and Inspections, and the SEC Office of International
Affairs and Office of the Chief Accountant. The delegation will meet
with senior leadership of China’s Ministry of Finance and the CSRC.

“The
purpose of this meeting is to provide an opportunity to exchange
information about how each country conducts inspections of auditing
firms and to move toward a bilateral agreement providing for joint
inspections of China-based auditing firms registered with the
PCAOB,” Ferguson said in a release.

Since
2007, the PCAOB has engaged in discussions with its Chinese
counterparts regarding a bilateral agreement that would enable the
PCAOB to conduct inspections of auditing firms in China. Recently,
both the PCAOB and Chinese authorities have committed to
accelerating their efforts to reach an agreement.

The
Sarbanes-Oxley Act of 2002 requires all public companies whose
securities trade on U.S. exchanges to use an audit firm that is
registered with the PCAOB, regardless of where the public company
and the audit firm are located. To date, the PCAOB has been blocked
from conducting inspections of auditing firms in China due to
sovereignty concerns raised by Chinese regulators.

Currently,
PCAOB registrants include more than 900 non-U.S. auditing firms from
87 jurisdictions, including 110 firms in China and Hong Kong.

One
of Doty’s greatest priorities is gaining access to China to conduct
inspections of PCAOB-registered firms. In an April interview with
the JofA, he said that meaningful progress was made at the
U.S.-China Strategic and Economic Dialogue that took place in
Washington on May 9.

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